Conditions For Internal Entrepreneurship

Journal of Management Development 13,9

Conditions for Internal Entrepreneurship P.G.W. Jansen

34

Royal PTT Nederland NV and Vrije Universiteit, Amsterdam, The Netherlands, and

L.L.G.M van Wees PTT Telecom BV, The Hague, The Netherlands Introduction Numerous organizations find themselves in a “turbulent field”[1]. The greater the complexity of their environment, the greater is their external uncertainty. But it is possible to cope with these uncertainties by structuring the organization differently and bringing about a new way of thinking[2]. Royal PTT Nederland NV (KPN) is an organization which has undergone a sweeping process of change. To be the best provider of information transport, the company had to change its internal working methods and adopt an “entrepreneurial” approach. This article starts by examining some theoretical notions of “entrepreneurs” and “managers”. It then looks at two cases at PTT Telecom (one of KPN’s operating companies). These are used to draw some conclusions and to provide a platform for further discussion. The Theory of Entrepreneurs and Managers Is an Entrepreneur a Person? One of the authors[3] has asserted elsewhere that enterprise, entrepreneurship and intrapreneurship are matters which tend to be automatically associated with a person. The person may have an idea, a vision and drive, and invariably will possess a range of impressive skills. But first and foremost the man or women in question will have a “personality” or “character”. Entrepreneurs exhibit an “innovative spirit”[4]; these authors published a questionnaire enabling every reader to determine his or her own “innovation quotient”. They can be divided into “types”[5,6] or even “archetypes”[7] and balance “between intuition and rationality”[8]. Leavitt[9] refers to the entrepreneur in the same sentence as “the visionary, the dreamer, the innovator, the creator (…) and the charismatic leader”. The implied association is that entrepreneurship has more to do with people than with systems[10].

Journal of Management Development, Vol. 13 No. 9, 1994 pp. 34-51. © MCB University Press, 0262-1711

The authors are grateful to Mr A.J.H. Kuis (Director of Innovation Management at PTT Telecom) and Mr R. Stuurman (Director of Internal and External Communications at PTT Telecom) for their comments.

The exclusive linkage of entrepreneurship and personality is not Conditions for substantiated by facts. It has been established, for example, that young starters Internal do not fail because of a lack of ideas or effort, but because they possess Entrepreneurship insufficient knowledge and ability in the fields of management, control, finance and administration. In other words, they do not lack personality, but tend to fall short on specific skills. 35 Research among 50 failed companies[11] revealed an overabundance of selfconfidence and a serious lack of critical capabilities. Time and again they evolved risky strategies and embarked on new adventures based on their overrated self-confidence. In the end they failed because of a lethal exhaustion of their reserves. These entrepreneurs were invariably characterized by qualities such as cocksureness, forcefulness, unwillingness to listen to other people, or, quite simply, a poisonous concoction of impulsive and injudicious decision making. Do Entrepreneurs Have Qualities? It is tempting to call an extrovert nature and affability the qualities of an entrepreneur, and to consider conscientiousness and a down-to-earth manner as contra-indications for entrepreneurship. Personality research[12,13] pinpointed conscientiousness as a good indicator for the attainment of a wide range of performance criteria (like performance, output and drawing benefit from training courses) in all professional groups. Affability was deemed irrelevant. Extroversion was also deemed important (in that sense the lay definition is not so far from the mark) but down-to-earthness was held to be indispensable. The entrepreneur was described as balanced, in control of his or her own destiny and a person who moves like an astute liberal between the extremes of dogmatically formulated views (a typically Dutch quality?). Intelligence also counts provided that it is more than a basal analytic capability (i.e. the intelligence “determined by the test”). It is not confined to passive knowledge, but extends to the ability actively to devise new things. So entrepreneurial intelligence is not merely a question of being able to analyse the different pieces of a puzzle to come up with a neatly packaged solution (analytic capability), but also a person’s ability to conceive new puzzles (synthetic capability with a touch of creativity[14]). The synthesis, plan or idea must be feasible, so the power of entrepreneurial thinking must be expressed by a knowledge of various business approaches and not just by a sharp mind that quickly separates main issues from side issues. An entrepreneur must possess an insight into logistics, finance, social matters and so on. There has to be a high degree of consolidated knowledge, or the convergence of university learning and, more importantly, what has been gleaned from years of on-the-job experience about solving everyday business problems in the right and wrong way. The content of this “practical intelligence” will differ according to the field of management. Whereas logistics requires experience in organizing people and resources plus a systematic manner of working, a person engaged on financial

Journal of Management Development 13,9 36

matters requires a keen eye for costs and benefits. Kotter[15,16] is among those who have pointed out that the efficiency of an entrepreneur’s work usually hinges on these knowledge bases (of customers, your own product, internal and external technology, the culture of your own organization and so on). But doing implies acting. It means operating in a practical environment where the prevailing situation determines the context of action. It also means that an approach focusing on the entrepreneur’s personality gives way to one oriented to skills specific to the situation at hand[17]. Are Entrepreneurs Able to Do Something? In a situational sense entrepreneurship is not so much a characterization consisting of weights on the personality vector of “intuition, independence, charisma and creativity” but rather a skills profile made up of aptitudes which have been mastered to a lesser or greater degree. They may include the ability to negotiate, present a case and conduct talks. Significantly, the entrepreneur’s behaviour is defined by verbs according to this line of reasoning. There are activities or endeavours limited by time and place. It is possible to “walk around” them, so to speak. Here it is what the entrepreneur does that counts, not what he or she is. Drucker[18] was prominent among those who said we should talk about the entrepreneur’s actions and behaviour and not about the psychology of the entrepreneur. Entrepreneurship cannot and must not be regarded as the privilege of the gifted few who have been blessed with exceptional personal qualities (i.e. the born entrepreneurs). Entrepreneuring is a question of doing and conducting. It consists of a group of actions or specific skills which can be observed, learned and assessed. Drucker also noted that after a short time new companies inevitably have to shift their attention from pure entrepreneurship to managing, i.e. to marketing, planning (especially financial requirements) and team-building. The danger of mythologization still lurks even if one looks on entrepreneurship as being determined by situations or skills. If overall entrepreneurship is defined as the ability to achieve a high return on invested capital (this was one of the success criteria applied by Peters and Waterman[19]), the corresponding ideal type of behaviour differs from that found in diverse organizations such as hospitals, railways and insurance companies which have performed well over a prolonged period of time in terms of return and in other respects too. Luthans[20] conducted an empirical study to find out what “real managers” do. An “open” observation of the behaviour of 44 managers, drawn from all levels of a highly diverse collection of organizations, resulted (after classification and integration) in a definition according to 12 “descriptive behaviourial categories”, situation-linked skills like planning, decision making, staffing, training and controlling. All are verbs, all are readily perceptible aspects of managerial behaviour because they can be isolated easily. The 12 descriptive skills categories were arranged into four main groups of actual

management work, i.e. communication (on average slightly less than one-third Conditions for of the time), traditional management behaviour as defined by Fayol (on average Internal one-third of the time), networking (on average one-fifth of the time) and human Entrepreneurship resource management (motivating staff, conflict management, development and so on, on average one-fifth of the time). This exercise produced a profile of scores of each of the 44 managers in terms 37 of the time spent on these four main groups. The total management group was split into two sub-groups: successful (defined purely operationally as rapid promotion and thus derivable from the salary growth curve) and effective (defined as the continual delivery of high-level results achieved through employees). This produced the picture shown in Table I as regards the frequency of the main activities (compared with the average). In terms of observable skills there would appear to be a difference between what successful managers do in their careers (customer management, network building/maintenance, competitive drive, orientation to fast results, attention to their image among top decision makers) and how effective managers spend their time (motivating people, correcting them where necessary, consulting and informing others, achieving results which will stand the test of time). Miller and Hanson[21] found the same picture in a similar study. Successful managers make their careers on what was described as “the smile factor”. The authors said: “Frequently they are outstanding personal performers, rather than being strong in leadership or managerial abilities”[21, p. 55]. Management of Entrepreneurship American sources[22, p. 7] and Dutch sources which include the Central Bureau of Statistics (CBS) (quoted in [23, p. 25]) tell us that the survival rate of fledgling companies is not high. Fewer than half get through the first five years. Mention of this failure percentage immediately prompts the comment that the budding entrepreneur needs to possess some indispensable basic skills. Soetekouw[23, p. 25] lists the ability to perform competition analyses, draw up a corporate plan and exercise marketing skills and, also, the ability to organize and control the internal organization (standardization and streamlining of work processes). The conclusion is that in order to survive, the internal or external executive, the entrepreneur or intrapreneur, will have to become more and more a

Successful

Effective

Communication

Slightly more

Much more

Traditional management

Much less

Less

Networking

Much more

Much less

Human resource management

Much less

Much more

Table I. Frequency of Main Activities

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manager. He/she will need the basic management skills. In circumstances where there is a functional differentiation according to employees, he/she will need to control according to Fayol[24] in the sense of “plan, organize, command, coordinate and check” (see[25] for the current validity of this five-part breakdown). Planning is the most important. At a modern company where decentralization has been taken to the extreme with the creation of numerous small units, planning can no longer be the exclusive province of a central policy-making unit of “smart people” (see the interview with the Dutch “father” of the business unit concept, Wissema, in NM2 in[26]). The situation is entirely different because line managers do the planning within a general framework set out by the board of directors. Local managers work simultaneously on the strategic, tactical and operational fronts. Their local markets call for a fast and local response, they are the people who know their customers the best and, last but not least, this all-round entrepreneurial role has a motivating effect. A local vision – a local “boy’s dream” (Wissema) – can be created out of a strategic analysis by local managers. The upshot is that local managers must increasingly venture out to become entrepreneurs. Heading for the Entrepreneurial Manager So how does a manager or entrepreneur become an entrepreneurial manager? Kotter and Heskett[27] identified culture as the key variable, based on research conducted among over 200 US companies. They make a distinction between “superficial culture” (visible behavioural patterns or “how we do things here”) and “depth culture” (shared values and standards). Depth culture is difficult to change because it is so manifest, it is the very air we breathe, so to speak. The authors made the significant observation that a depth culture is maintained by being embedded in “superficial” systems and procedures. A remuneration system is the prime example. Many of today’s cultural sermons handed down by top managers do not stand up when their companies are examined with the help of one simple question: “Who gets promoted here?”. What we find is that many companies encourage behaviour A (say entrepreneurship, taking risks and responding to the customer), whereas in point of fact they reward behaviour B (conformism, rigid management, “looking after the shop”). Conversely, a revised remuneration system can be a strong anchor for a new organizational structure. In their treatise on internal entrepreneurship, Kuratko et al.[28, pp. 32-3] concluded that “employees are willing to work on new projects and challenging teams if the rewards are apparent”. They added that steps in this direction do not necessarily need to be confined to simple pay rises. “It should be mentioned that the exact rewards for corporate entrepreneuring are not yet agreed upon by most researchers.” Finally, cultural changes appear to come about from above. They stand or fall with power in the sense that somebody has to start pushing, albeit subtly. According to Beer et al.[29], local behaviour will not change “automatically” if head office “announces” change programmes, intentions, training courses,

quality programmes and so on, but it later emerges that only the formal Conditions for organization has been changed. A different stacking of the building blocks of Internal the organization is no guarantee that the behavioural patterns of the employees Entrepreneurship in those blocks will change. On the contrary: keeping in place the old working methods will perpetuate the old organization. It is wrong to assume that the formal organization (structure) and the informal organization (work and 39 behaviour) are separate systems. Beer et al.[29] discovered during a four-year study in six large companies that real change takes place in a way “demarcated by situations”. The managers of local business units concentrated on “real work” rather than “abstractions such as ‘participation’ or ‘culture’”[29]. Changing means learning and the only way this can occur meaningfully is in concrete situations. Change does not come about through general attitudes or knowledge, but by the way people behave at work. And since that behaviour depends on where a person is embedded in the organization, i.e. by his or her role, any attempt to change behaviour must start by placing the person in a new organizational setting, by creating a new environment with different requirements, or by assigning a new collection of competences conducive to effective operations. The authors sketched a six-step plan for changing organizations: (1) Mobilize involvement in the process of change by means of a joint diagnosis of the issues facing a company. Let people explain what they think is wrong and what needs to be done. (2) Develop a joint vision of organizational and managerial requirements which will lead to a strong competitive position. This diagnosis is in effect a “task-oriented” medication. (3) Ensure there is a consensus for the new vision, make sure its implementation is endorsed and ensure there is cohesion so as to guarantee continuity. This requires strong leadership from the local general manager, sufficient support in training programmes and other ways, and the resolve to replace people who cannot or will not change – but only after they have been given an opportunity to prove themselves. (4) Expand the organization to all departments without exerting pressure from above. Allow each department to re-invent the wheel if necessary. (5) Institutionalize the reorganization by formal policy principles, system and structures. (6) Evaluate strategies and adjust them to solve problems in the reorganization process. Schein[30] arrived at the same step-by-step approach developed from a strong orientation to the psychology of the individual. In simple terms, his proposition is that fear of change should be overcome “paradoxically” by creating an even greater fear. The key word is “destabilization”[30, p. 88]. He contends that information entirely out of keeping with the existing working methods should

Journal of Management Development 13,9 40

be imparted boldly and credibly. Moreover, he believes a direct relationship should be forged between the misfit of organizational behaviour and what the environment (usually customers) want on the one hand, and the everyday working behaviour on the other. Employees should not be allowed to shy away from things which are their “own fault”. If the primary fear of changing makes way for a greater concern (created on genuine grounds) about how things are done now, the result will be “a fear of not changing” and thus the laying of foundations for change. Only now do we arrive at the third step, i.e. the cultivation of a sense of security by sketching solutions in practical terms, by outlining ways in which people might alter their behaviour and giving them a chance to practise. This shows an employee that the road to a different organizational culture is not littered with obstacles. Neumann[31] is among those who are critical of popular cultural views in which either the charismatic leader single-handed[31, p. 22] clears away the “dead wood”, takes difficult decisions quickly and takes it on himself to fire anybody who does not agree with him, or the top management team with vision and competence dramatically turns round a company in harmony with the entire workforce[31, p. 23]. In reality a leader never possesses so much power. He or she cannot do it alone and employees are anything but the obedient, passive recipients of a system of values and standards redefined by the management. Neumann makes the point that employees must opt as individuals for a change of culture if the change is to be lasting. It boils down to “self dictated change in individuals and their reference groups”[31, p. 27], i.e. once again to local change. The Practical Side: Two Cases at PTT Telecom Netherlands Entrepreneurship PTT Telecom is one of the major operating companies of Royal PTT Nederland NV (KPN), the largest private sector employer in The Netherlands with a workforce of around 100,000. PTT Telecom employs around 31,000 people who work at several business units including National Networks, Business Communications, Residential Market and International Telecommunications. A number of corporate policy and corporate service units operate from head office. The business units bear responsibility for business areas. A business area is composed of a business unit which directs operations at central level and those parts of the 13 Telecom districts which are concerned with the specific field covered by the business area. A business unit may set down regulations and control activities. Through a system of “integration management” the districts are ultimately the people who carry out the company’s mission and pursue its objectives at operational level. KPN (and thus the operating companies) were privatized at the start of 1989. The first issue of shares in the company were offered for sale in June 1994. Major changes have occurred in recent years and Table II provides an indication of the direction in which the company is moving.

From

To

Public sector Monopoly Production Subscriber Technical by nature Costs Rules/procedures Powers Functional control Knowing Security Managing Giant tanker

Private sector Competition Service Customer Customer satisfaction Profit Results Responsibilities Integral control of operations Doing Risks Entrepreneuring Fleet of manoeuvrable ships

While this change was going on, the company introduced total quality management (TQM) and gave top priority to a revised policy on management development. About 500 senior managers were offered personal contracts of employment outside the framework of the collective labour agreement. They were given terms and conditions of employment on a par with those elsewhere in the private sector in The Netherlands. Searchers and other channels were used to recruit a very large number of new managers for the top echelons of the company. The company also centralized and professionalized the recruitment of young people with higher vocational training and a university education. This recasting of policy has already produced some spectacular results. A recent opinion poll carried out by the NIPO organization revealed that among this target group KPN had improved significantly its image as an attractive employer compared with Shell, Akzo, DSM and Philips and is now number two in The Netherlands. KPN’s managing board has commissioned an annual management audit which aims to identify talented employees. The audits are supervised by the management development department and the findings are reported management-to-management. The information uncovered by these audits is used to initiate action (like career programmes, international exchanges and job rotations) and to revise policy. Instruments were developed to support the philosophy that each employee is responsible for his or her own career with coaching from a manager. KPN introduced a system of job performance appraisal, the company spelled out its management style, mapped out training courses for senior management (in the opinion of KPN) and passed them on to managers. Starting from the basic notion that service business is identical to people business, KPN has invested in

Conditions for Internal Entrepreneurship 41

Table II. From Civil Service Organization to Business Enterprise

Journal of Management Development 13,9 42

total quality management and the development of budding managers, all for the single purpose of making sure that KPN achieves its objectives. The Telecom Perspective PTT Telecom decided to invest in TQM and simplify and inject uniformity into its business processes in order to gear up for growing international competition and a rapidly changing marketplace. Perspective was the name given to a major reorganization programme that got under way in late 1990 and will affect virtually all the company’s employees in the 1992-1994 period. The President of PTT Telecom visited all departments of the company to “sell” the programme to the workforce. A management of change group was established to co-operate closely with managers in creating customer-driven employees, formulas and organization. Everything turns around the concept of integration management for services. This phased process of change started at the “sharp end” of the company in which employees come face to face with customers and will finish in the “back office” (i.e. head office). Perspective is being implemented without any loss of jobs. In order to give the company a “face” immediately recognizable by customers, it was decided to set up 32 Telecom regions with far-reaching competences. This approach allows an alert and effective response to customers’ requirements. Lengthy procedures and repeated referrals to other departments are a thing of the past. Each region has a workforce of 200 to 300 and is responsible for 200,000 to 300,000 customers in its own area. This approach keeps all eyes trained firmly on the customer base and ensures that each manager knows his own employees personally. Each region is responsible for all activities performed for a customer according to the principle of one stop shopping. They deal with everything from consultancy to sales, from installation to servicing and from invoicing to collection. From the customers’ point of view, the advantage is that they perceive that one part of the Telecom organization is handling all their business, in a simple and clear fashion. This is the principal criterion for the work of the regions. The new approach has also made things simpler and clearer for employees who work in the operational arm of the organization. The 13 Telecom districts have become “umbrellas” for the regions and they provide direct support. For the kind of support which needs to be mobilized on a larger scale (such as high-quality services tailored exactly to a customer’s specifications), the company decided to establish six customized project units. Plans also led to the creation in each district of an engineering department and a network management department for the infrastructure. Together these measures created a new-style Telecom district in which the director leads a group of managers responsible for engineering, management, finance and personnel affairs, plus the managers of the regions and (where applicable) the managers of the customized project units. The other parts of PTT Telecom’s internal organization (the business units and head office) are going to be reorganized so as to create far shorter lines of

communication with the operational branches (i.e. the telecom districts and Conditions for regions), with recognizable structures and tools for getting goods, services and Internal systems to customers in the marketplace. Entrepreneurship Almost 24,000 members of the workforce of 31,000 will be affected by the reorganization into telecom regions (8,000 employees), customized project units (1,800 employees) and engineering and maintenance (14,000 employees). A 43 salient fact is that all positions in the first and second management layers of all of these new or revamped organizations are being filled through the internal advertising of vacancies throughout KPN nationwide. An innovation is that employees on grades which make them eligible for an advertised management position are expected to submit an application which may be turned down. It is by no means easy to manage and solve the social problems which arise out of this approach. A separate follow-up programme has been put in place so as to devote special attention to this matter. By the time Perspective is completed, more than 500 management positions will have new incumbents. The process is being directed by the management development department. The creation of the new organization envisaged by PTT Telecom required a penetrating examination of ways of standardizing primary processes so as to make them more uniform. This formed the basis for defining positions. Job descriptions were set down which were later used in the texts of job advertisements. A model called Azides was used which is also the basis for recruitment and selection of young people with higher vocational training and university graduates at KPN. Further guidelines for the reorganization were derived from the KPN management style and the basic principles of the TQM programme: ● The manager is and remains responsible for all decisions regarding personnel. ● The manager works with a clearly defined organization. ● The manager creates conditions which are such that employees can and want to work for the organization. ● The manager invests consciously in the development of the capabilities of his employees. The following matters may be deduced from the text of the advertisement for the general managers of the 32 Telecom regions. A general manager of a telecom region is responsible for achieving commercial objectives and ensuring the optimum progress of the region’s business processes within the frameworks marked out by the company (e.g. the formulas for the business areas). For the more specialized projects, a general manager may enlist the services of the customized project unit, but retains his own overall responsibility. A general manager is an entrepreneur whose task is to achieve the turnover, market share and contribution to profits which have been agreed with him contractually by senior management. He operates in the Telecom style as an action-oriented quality-conscious manager. He ensures that services in the region’s area are provided in keeping with the functions of the business area, and makes sure that customers’ wishes are

Journal of Management Development 13,9 44

met with the deployment of all employees at the lowest possible cost. In other words, he never loses sight of his customers, employees and his contribution to profits. A general manager helps implement a policy continually being adapted to changing circumstances in the marketplace, and ensures that the community at large perceives his region as a reliable supplier of complete telecommunication services.

This description and profile of a general manager reveals a strong orientation towards management and internal entrepreneurship. A general manager upholds the KPN management style and ensures that the region is organized in a way that places the customer first. This entails clarifying tasks and responsibilities to employees and creating conditions conducive to co-operation and effectiveness. Keywords in this process are regular meetings about the progress of work and the removal of any obstacles which may have arisen. Procedures and structures play a supporting role in achieving these goals. A general manager’s job is to be the “gatekeeper” of an organization which is the interface between company and customer, i.e. where the company delivers a package of services and customers form their opinions of the company. The selected general managers were offered a range of professional training facilities (focused on knowledge of processes, management style and international aspects) and were involved in the appointment of the members of their own management teams. Positions in the second management layer were also filled through internal advertisements and, before anybody was appointed, a check was carried out on the “chemistry with the general manager” to make sure that an efficient management team could be put together. A top-down process was used to compose “entrepreneuring” management teams strong on team spirit and unequivocal commitment (“together and explicit”). Once again a customized training programme was devised to facilitate optimum team-building. PTT Telecom’s Shared Values: How Do We Make Them Work? Shortly after the state enterprise Netherlands PTT became Royal PTT Nederland NV (or KPN for short), the KPN management style was set down in a manual, a yardstick for a new result-oriented job performance appraisal system. The attractive manual was circulated among all managers (more than 7,000) at KPN and was discussed with them at great length in “management-tomanagement talks”. The emphasis was on the way the general principles of the management style needed to be expressed in everyday management (e.g. in appraising the performance of employees). KPN’s general management principles were compressed into seven “shared values” for PTT Telecom and they have become the modus operandi for managers and employees alike. These PTT Telecom values and standards were formulated after lengthy discussions within PTT Telecom. The President of PTT Telecom led the rally in a way that made the values explicit and showed everybody what needed to be done. The values and standards consist of a mixture of controlled management (completing high-quality work on time, according to the customer’s needs and cost-consciously) and strategic

entrepreneurship (exhibiting enthusiasm, commitment and audacity with a Conditions for sharp eye for the market). Internal At the root of the values and standards is the realization that the Telecom Entrepreneurship intrapreneurs or interpreneurs of the 1990s must combine management and successful entrepreneuring in the best possible way. Management is a question of doing things properly, i.e. on time, tailored to needs, alert to what the 45 customer wants and efficiently/effectively. To some extent this can be achieved by rearranging work processes, for example by standardizing business formulas. This standardization touches on the company’s desire to present a single “face” to the customer (see previous section). Good management pays off on two sides. First, it greatly supports entrepreneurship, because at many companies the battle for the market is won internally. Second, it generates additional profit through internal efficiency (e.g. one per cent less sick leave would give KPN an additional 50 million guilders in profit). At PTT Telecom management is synonymous with internal entrepreneurship in the sense of getting things done, working towards results, “hands on” management and an action-oriented approach. At the same time, expansive external entrepreneurship remains a mainstay of PTT Telecom, because it is the motor for increasing shares of markets the company has already entered and for penetrating new ones. A step-by-step plan was devised to introduce the shared values because it had been observed that many cultural missions tended to become bogged down in: ideology: what people say, the rhetoric, the policy, the words and the culture do not catch on. They have no effect on: how things are done, what people do, the day-to-day work (“This is how we do it ...”), the action and everything that underlies it, or the culture and basic values and standards of the company. It was evident at PTT Telecom that a change of culture would come about only once it had been made abundantly clear that the way things had been done in the past was no longer effective. First, however, people had to be confronted with this sobering fact. This made it necessary to: ● show people through feedback why changes were essential (hard facts rather than theory); ● outline alternatives; ● support learning and experimenting with a new way of doing things; ● embed new behaviour in structures, with contractually agreed arrangements, bonuses and targets, job performance appraisal, a system of management development and so on. For these reasons it was decided to introduce shared values step-by-step so as to make allowance for all of these principles. In practice the third step has proved indispensable. Employees have been asked to give an explicit “yes” (not literally) to the new manner of working. This is the only way of sparking a confrontation (including an inner confrontation) with the prevailing culture. Many people were not conscious of the existing

Journal of Management Development 13,9 46

culture so it continued to lurk in the background as the natural environment in which people worked. In the event it transpired that people latched on to the new approach by talking about and discussing the new culture rather than trying to cling to the old one. Instead of denouncing the old structure, people started to talk about the new shared values. Examples of the final step, i.e. the anchoring of the new approach in procedures, structures and systems, are: ● Recruitment and selection: young people with higher vocational training and university qualifications are recruited according to a shared values profile (so as to build up the company from the bottom) and they are selected with the help of assessment centre methods (in which “sitting” managers participate and have a chance to examine the new profile). ● Management development: employees bear their own responsibility for their careers. Everybody is the owner of his or her own career and the company merely supports, coaches and facilitates. ● Job performance appraisal: managers should encourage the delegation of responsibilities. Appraisals should be confined to results and output. Appraisals, salary adjustments and personnel development are interconnected and reaffirm each other. ● Job content: people should not be confined to “boxes” but should be allowed to exercise their individual entrepreneurship and be judged by their performance. Job descriptions must formulate the results work must yield and should do nothing more than suggest a way of achieving them. There should be no interference. Each job should be looked on as a “business unit” and each employee as an “entrepreneur”. The idea is to be big but small at the same time, because a company is a network of numerous “small people”. Lessons, Tips and Conclusions A sharp eye for what customers want has resulted in the new organizations where the uniformization, control and management of processes and people are the focal point, with due regard to the company’s own strengths and weaknesses. Managers and employees now have an opportunity to build their future together thanks to the redesigned control model based on what takes place at the “sharp end” of the organization, accompanied by concomitant social tools. Conditions have been created to reduce the amount of internal energy spent on friction and problems and this is obviously in the interests of customers. The organization has been made more transparent and easier to oversee (smaller and flatter), an excellent starting position for an effective and entrepreneuring co-operation with human dimensions. The positioning of the Telecom regions allows optimum attention to the company’s relationship with its customers. It takes managers and employees

with a proactive, entrepreneurial attitude to pick up and recognize signals from Conditions for the business environment. The Telecom regions can go on developing and Internal responding if their employees evolve new initiatives, devise changes and show Entrepreneurship how they should be implemented. They are expected to explore new situations themselves and to seize opportunities to tackle subjects and make improvements. This requires a certain degree of curiosity about the unknown 47 and the will to learn new things. A good approach to internal entrepreneurship is probably simply to make a start, in the knowledge that the starting position and ultimate goal are clear, but the road leading to the goal is slightly less obvious. Adjustments will invariably have to be made as the road unfolds. No attempt should be made to plan everything systematically in advance or to draw up five-year policy plans. Given the unpredictability of the business environment, the organization must continually improve and be prepared to investigate and rectify its weaknesses whenever they become apparent. The same applies to every individual in the organization. In that respect organization development and management development are exactly the same. Employees like this situation. Strategic management has replaced strategic planning[26]. Each manager thinks in broad frameworks, makes plans and exercises control, but he does so from the point of view of operations. Viewed in this light, there is no longer a separation of the strategic and operational levels (and, consequently, there is no longer the hierarchical arrangement into the three management layers, i.e. operational, tactical and strategic). Discussion As mentioned in the introduction, an entrepreneur is seen typically as somebody who has an idea. Obstacles do not and may not exist. Innovation and the creative elaboration of an idea into an enterprise, large or small, are the things which count, plus matters such as growth and expansion. In this “adolescence” everything revolves around the entrepreneur as a person. This explains the use of highly personalized concepts and the abundance of dimensional notions. The way a budding entrepreneur acts exhibits a great similarity with the profile of the success-hungry manager given in the section on the Telecom perspective. In this pioneering age there is an emphasis on networking and personal communication. Fledgling entrepreneurs feel obliged to pursue success in terms of growth and expansion but are apt to neglect the control component. The acquisition of a secure place in the commercial arena is deemed more important than efficient production and effective customer-driven services. As de Chambeau and Mackenzie[32] point out, an innovator is a person who creates and directs a team rather than being an active member of it. In the process of establishing his credentials, the entrepreneur has to change or at least widen his behaviour. Success-motivated personal communication and networking make way for (or in any case even exist alongside) management activities dictated by effectiveness criteria. They are activities

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such as managing, planning, structuring, team-building and organizing in the sense of functionalizing some personal roles into organic positions – sometimes even with the blossoming of a bureaucracy as an efficient control tool. Far more than the starting innovator, the manager is externally oriented. He is wildly enthusiastic about his own idea and personal spark and leans toward employees, financiers, customers, suppliers and so on. The initial discovery moves aside for a functionally segmented environment, a management-dictated echelon of markets such as the raw materials market, the money market, the labour market and (last but not least) the sales market. The entrepreneur feels compelled to manage and control. The 1992 businesswoman of the year, Nina Aken, gave a talk about her business ups and downs and said the following characteristics and/or skills were indispensable for entrepreneurship[33]: ● a knowledge of the business; ● skills (e.g. learning how to read balance sheets); ● possession of some basic notions and intuitions; ● team-building (gather around you capable people whom you can trust); ● do not be too self-assured (i.e. be willing to listen to other people); ● speed (timing); ● the ability to fail more than once (ability to permit yourself to fail and also in the sense of being allowed to fail by an understanding environment; see [34] about the efforts made at 3M to create a climate in which ups and downs are accepted). The effect of the mastery of this collection of skills (the list defines a perfect mixture of successfulness and effectiveness) is that the entrepreneur/manager beats competitors in the speed of thinking, acting and deciding. Speed is one of the constants of entrepreneuring, but whereas it is based in the early years on daring, bluff, risks and personal powers of persuasion because the entrepreneur is driven by “getting high”[35], it will as time passes take the form of intuitive decision making in the way described in the introduction, and be associated increasingly with an undercurrent of a more conservative, cautious career path best described as “getting secure” or “getting ahead”. Aken said that over the years she had not lost any of her speed, but had become less inclined to take big risks. Successful entrepreneuring boils down to being prepared to become a manager in due course. The question is what needs to precede the entrepreneurial phase if there is to be a successful transition from personal entrepreneurship to functional management. The answer seems obvious: before leaping into entrepreneurship, you must possess a set of basic skills which can serve as a platform for the later elevation to management. This explains why many authors (see [22, p. 7]) strongly urge that a young entrepreneur does not set out without some solid professional training as a basis. He is less clear about

precisely what training is needed: technology, mathematics, psychology or Conditions for business economics? What is important is that the budding entrepreneur is Internal confident that he is clever and possesses some abilities. Entrepreneurship Everybody probably now agrees with Moss-Kanter[10] that the future belongs to a combination of director and innovator, or entrepreneur and manager (in one and the same person and position). But there is no clear answer 49 to the question of how to achieve this dynamic hybrid (Moss-Kanter[36] describes how some specific organizations managed to arrive at this exciting mix, and “thus” how other organizations might be able to do the same), i.e. how a person moves from innovator to manager or from director to entrepreneur. There is no clarification of the how of the self-management of entrepreneurship. Should management skills prevail over the nerve to stick out your neck as an entrepreneur? Does the budding entrepreneur need to draw this nerve from the security of skills acquired in professional training? Is confidence in your knowledge and skills a springboard for the leap into entrepreneurship? Or should the idea or conception be at the forefront, because it is guarantee enough that you can get to grips with management skills later? Is entrepreneuring principally a question of acting and going for a goal and waiting for your own image to emerge by means of self-reflection and feedback from other people – sometimes all too clearly with a notice of a bankruptcy? The question of how innovation leads to management, or how an entrepreneur becomes a manager, continues to be the subject of speculation rather than clear theories or well founded explorations. Sometimes the sad conclusion is that the combination of bureaucratic management and autonomous entrepreneuring is an obsession (see [37]), while at the same time it is stressed that the entrepreneur or intrapreneur will be the pivot of the corporate organization of the next century[38]. Even the model of managerial leadership recently presented by Flanagan and Thompson[39, p. 3] is little more than an attempt to integrate in one person the three components of transformational management (= leadership), transactional management (= management) and situational sensitivity (= knowing which management type is indicated in which situation). References 1. Emery, F.W. and Trist, E.L., “The Causal Texture of Organizational Environment”, Human Relations, Vol. 18, 1965, pp. 21-31. 2. Van der Horst, F. and Van Wees, L.L.G.M., Effectief management gedrag (4e druk), (Effective Management Behaviours (4th ed.), Nelissen, Baarn, 1993. 3. Jansen, P. G.W., “Management van ondernemerschap” (Management of Entrepeneurship), in Winkel, D. (Ed.), Denken, durven, doen. Boek der vrienden van Pieter A. Cornelis, ( Thinking, Daring, Doing, Book of Friends of Peter A Cornelis), Stichting Bedrijfskundig Onderzoek, Vrije Universiteit (Foundation for Business Economics Research, Free University), Amsterdam, 1993, pp. 42-66. 4. Ross, J.E. and Unwalla, D., “Who Is an Intrapreneur?”, Personnel, December 1986, pp. 45-9. 5. Atterhed, S., “Intrapreneurship: The Way Forward?”, in Clutterbuck, D. (Ed.), New Patterns of Work, Gower, Aldershot, 1985, pp. 78-86.

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6. Maxon, J., “Innovators, Entrepreneurs and Intrapreneurs: Food for Thought”, Industrial and Commercial Training, Vol. 18 No. 5, September-October 1986, pp. 13-16. 7. Lessem, R., Enterprise Development, Gower, Cambridge, 1986, pp. 169-81. 8. Entrepreneurship and intrapreneurship: balanceren tussen intuitie en rationaliteit, Congresverslag, Bedrijfskunde Interfakulteitsvereniging,(“Balancing between Intuition and Rationality”, Congress Report, Business Economics Interfaculty Society), Groningen, 3 April 1986. 9. Leavitt, H.J., “Pathfinding, Problem Solving, and Implementing: The Management Mix”, in Leavitt, H.J., Pondy. L.R. and Boje, D.M. (Eds), Readings in Managerial Psychology, 4th ed., The University of Chicago Press, Chicago, IL, 1989, pp. 591-605. 10. Moss-Kanter, R., The Change Masters, Unwin, London, 1986. 11. Hambrick, D.C. and D’Aveni, R.A., “Large Corporate Failures as Downward Spirals”, Administrative Science Quarterly, Vol. 33, 1988, pp. 1-23. 12. Meijer, G.J. and Shack, J.R., “Structural Convergence of Mood and Personality: Evidence for Old and New Directions”, Journal of Personality and Social Psychology, Vol. 57, 1989, pp. 691-706. 13. Barrick, M.R. and Mount, M.K., “The Big Five Personality Dimensions and Job Performance: A Meta-analysis”, Personnel Psychology, Vol. 44, 1991, pp. 1-26. 14. Sternberg, R.J., Beyond IQ: A Triarchic Theory of Human Intelligence, Cambridge University Press, Cambridge, 1985. 15. Kotter, J.P., The General Managers, The Free Press, New York, NY, 1982. 16. Kotter, J.P., “What Effective General Managers Really Do”, Harvard Business Review, Vol. 60, 1982, pp. 156-67. 17. Jansen, P.G.W., Het Beoordelen van managers. Effectiviteit van assessment center methoden bij selectie en ontwikkeling van managers, (The Assessment of Managers. Effectiveness of Assessment Centre Methods in Selecting and Developing Managers), Nelissen, Baarn, 1991. 18. Drucker, P.F., Innovation and Entrepreneurship, Harper & Row, New York, NY, 1985. 19. Peters, T.J. and Waterman, R.H., Excellente ondernemingen. Kenmerken van succesvol management, (Excellent Companies. Aspects of Successful Management), Veen, Utrecht, 1988. 20. Luthans, F., “Successful vs Effective Real Managers”, The Academy of Management Executive, Vol. 2, 1988, pp. 127-32. 21. Miller, A.F. and Hanson, M., “The Smile on the Face of a Leadership Tiger?”, Personnel Management, October 1991, pp. 54-7. 22. Twaalfhoven, B.W.M., “Can You Teach Entrepreneurship?”, Thinktank Magazine, No. 1, 1991, pp. 7-10. 23. Soetekouw, A.A., “Overheidsbeleid remt ondernemerschap”, (“Government Policy Slows Down Entrepreneurship”), Thinktank Magazine, No. 2, 1991, pp. 24-7. 24. Fayol, H., General and Industrial Management, (translated), Pitman, London, 1949. 25. Carroll, S.J. and Gillen, D.J., “Are the Classical Management Functions Useful in Describing Managerial Work?”, Academy of Management Review, Vol. 12, 1987, pp. 38-51. 26. Groos, D.F., “Een jongensdroom en strategisch ondernemerschap”, (“A Boy’s Dream and Strategic Entrepreneurship”), NM2: NIVE Management Magazine, Vol. 3, 1 February 1993, pp. 14-16. 27. Kotter, J.P. and Heskett, J.L., Corporate Culture and Performance, The Free Press, New York, NY, 1992. 28. Kuratko, D.F., Hornsby, J.S., Naffziger, D.W. and Montagno, R.V., “Implement Entrepreneurial Thinking in Established Organizations”, SAM Advanced Management Journal, Winter 1993, pp. 28-39.

29. Beer, M., Eisenstat, R.A. and Spector, B., “Waarom veranderingsprogramma’s geen verandering teweegbrengen”, (“Why Change Programmes Do Not Effect Change”), Holland Management Review, Vol. 31, 1992, pp. 7-16. 30. Schein, E.H., “How Can Organisations Learn Faster? The Challenge of Entering the Green Room”, Sloan Management Review, Vol. 34 No. 2, Winter 1993, pp. 85-92. 31. Neumann, J., “When an Organisation ‘Needs a Cultural Change’: Some Cautions”, Review 1991 Tavistock Institute, 1991, pp. 22-7. 32. de Chambeau, F.A. and Mackenzie, F., “Intrapreneurship”, Personnel Journal, July 1986, pp. 40-5. 33. Aken, N., Voordracht op het Thinktankformum over Ondernemerschap, (Internal Entrepreneurship, Special issue, Free University), Vrije Universiteit, Amsterdam, 1 June 1992. 34. Johnson, A., “3M: Organized to Innovate”, Management Review, Vol. 75, 1986, pp. 38-9. 35. Derr, C.B., “Managing the New Careerists”, Jossey-Bass, San Francisco, CA, 1986. 36. Moss-Kanter, R., When Giants Learn to Dance, Simon & Schuster, New York, NY, 1989. 37. Geneen, H., “Why Intrapreneurship Doesn’t Work”, Venture, Vol. 7, 1985, pp. 46-52. 38. Snow, C.C., Miles, R.E. and Coleman, H.J. Jr, “Managing 21st Century Network Organizations”, Organizational Dynamics, Vol. 20, 1992, pp. 5-19. 39. Flanagan, H.D. and Thompson, D.J.C., “Leadership: The Swing of the Pendulum”, Leadership and Organization Development, Vol. 14 No. 1, 1993, pp. 9-15. Further Reading Mahoney, T.A., Jerdee, T.H. and Carroll, S.J., “The Jobs of Management”, Industrial Review, Vol. 4, 1965, pp. 97-110. Mischel, W., Personality and Assessment, Wiley, New York, NY, 1968.

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